The RealReal and ThredUp, two of the biggest online resale platforms in the US, both reported narrowing losses in their latest earnings reports. ThredUp posted a net loss of $18.8 in the second quarter of 2023, down from $28.4 million in the year prior. The RealReal, meanwhile, saw its net loss drop to $41.3 million in the quarter compared to $53.2 million in 2022.

Investors were pleased: Shares of both stocks are up double digits Wednesday morning.

“We feel very good about the path to Q4 breakeven,” ThredUp CEO James Reinhart said in the earnings call Tuesday evening. In the same report, ThredUp saw its revenue increase 8 percent, to $82.7 million. The company highlighted the growth of its “resale-as-a-service” offering, with 11 new clients in the second quarter of 2023. That’s up from the 40-some brands it had at the end of 2022, according to Reinhart.

The RealReal, meanwhile, hopes to reach EBTIDA positive in 2024, driven by a higher-margin consignment structure, new supply partnerships and other revenue streams, such as on-site advertising.

The company saw its gross merchandise value, a metric of sales, shrink 7 percent in the second quarter to $423 million, as a result of its focus on higher-margin sales, including eliminating products that the platform buys directly rather than consigns on behalf of selling customers.

In the second half of the year, The RealReal will also be building out its ability to sell products without managing the actual inventory by working with what it’s calling “trusted partners.”

“The example I like to use is somebody who sells watches in a shop,” chief financial officer Robert Julian said in the earnings call. “If they have a used watch business, they can’t shut down their shop and give all of our inventory to sit in one of our warehouses but they could maintain that inventory locally and represent that merchandise on our site [and] ultimately ship it to us for authentication and then have that reach the customer.”

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Can Fashion Resale Ever Be a Profitable Business?

Companies like The RealReal and ThredUp promised Wall Street that with scale comes profit. But operational costs and competition have kept them in the red.